2. 2 Weak Accounting System Non-availability of copies of FMP Manual at District/Block Level. Non-availability of copies of FMP Manual at District/Block Level. Non-availability of VEC Manual at Schools. Non-availability of VEC Manual at Schools. Inadequate accounts staff. Inadequate accounts staff. Accounts staff not being trained properly. Accounts staff not being trained properly. Non-maintenance of Books of Accounts like Cash Book, Ledger, Journal, Cheque issue register, Stock register, Asset register, Advance register etc. Non-maintenance of Books of Accounts like Cash Book, Ledger, Journal, Cheque issue register, Stock register, Asset register, Advance register etc. Cash books not being maintained on double entry system. Cash books not being maintained on double entry system.

3. 3Contd./- Bank reconciliation statement not being prepared regularly. Bank reconciliation statement not being prepared regularly. Treating advances as expenditure. Treating advances as expenditure. Large outstanding advances. Large outstanding advances. Delay in submission of utilization certificate. Delay in submission of utilization certificate. Weak internal audit system. Weak internal audit system. Delay in submission of statutory audit reports. Delay in submission of statutory audit reports. Delay in audit report compliance. Delay in audit report compliance.

4. 4 Diversion of funds. Diversion of funds. Other financial irregularities. Other financial irregularities. Excess expenditure over and above the approved targets. Excess expenditure over and above the approved targets. Keeping funds under Fixed Deposit to avoid lapse of funds. Keeping funds under Fixed Deposit to avoid lapse of funds. Delay in transfer of funds to District and Sub-District level units. Delay in transfer of funds to District and Sub-District level units. E-Transfer not being followed where facilities exist E-Transfer not being followed where facilities existContd./-

5. 55 Measures FMP Manual Ensure that FMP manual with all amendments is reissued upto block level. VEC Manual Modify the VEC Manual as per the FMP manual on accounting system and issue the same to all VECs/Schools. Strengthening of Accounting System

6. 66 Staffing – Para 83 of the Manual provides indicative staffing structure at SPO and DPO. Para 83 of the Manual provides indicative staffing structure at SPO and DPO. Also provide account staff at block level to provide resource support to Cluster, VEC/School. Also provide account staff at block level to provide resource support to Cluster, VEC/School. Fill up all vacant positions by September, 2009. Fill up all vacant positions by September, 2009.Contd./-

7. 77 Capacity Building Para 84 of the Manual provides training to the accounts staff. Para 84 of the Manual provides training to the accounts staff. Provide minimum 5 days mandatory training in a year to accounts staff at all levels. Provide minimum 5 days mandatory training in a year to accounts staff at all levels. Mainly focus on accounting aspects, maintenance of double entry system of cash book, bank reconciliation, procurement etc. Mainly focus on accounting aspects, maintenance of double entry system of cash book, bank reconciliation, procurement etc.Contd./-

8. 88 Hire the services of CA to impart training on double entry system Hire the services of CA to impart training on double entry system The accounts staff trained at district level should impart training to staff maintaining accounts at sub district level units The accounts staff trained at district level should impart training to staff maintaining accounts at sub district level units Also impart training on accounting and procurement procedure at VEC/ School level Also impart training on accounting and procurement procedure at VEC/ School levelContd./-

9. 99 Books of Accounts - Para 50 of the Manual provides the list of books of accounts, registers etc. to be maintained Para 50 of the Manual provides the list of books of accounts, registers etc. to be maintained Ensure that the prescribed books of accounts, particularly cashbook, ledger, journal, registers for cheque issue, advance, stock, asset, etc. are maintained at all levels wherever expenditure is incurred Ensure that the prescribed books of accounts, particularly cashbook, ledger, journal, registers for cheque issue, advance, stock, asset, etc. are maintained at all levels wherever expenditure is incurred Ensure annual physical verification of stock and asset Ensure annual physical verification of stock and assetContd./-

10. 1010 Cash Book on Double Entry System – Para 77 of the Manual provides detailed procedure for maintenance of cash book including double entry system Para 77 of the Manual provides detailed procedure for maintenance of cash book including double entry system Ensure that the prescribed procedure is followed Ensure that the prescribed procedure is followed It may not be possible to maintain double entry system of cash book at cluster and VEC / School level It may not be possible to maintain double entry system of cash book at cluster and VEC / School level Simple system of cash accounting may be followed at these levels Simple system of cash accounting may be followed at these levelsContd./-

11. 1111 Accounting Software - Most of the states have introduced accounting software / tally software Most of the states have introduced accounting software / tally software Remaining states should also introduce this system of accounting early to improve the accounting system Remaining states should also introduce this system of accounting early to improve the accounting system Maintenance of manual system of cash book can be dispensed with in such cases provided print out of the daily cash transactions are taken out and kept on record, each entry duly attested by the DDO Maintenance of manual system of cash book can be dispensed with in such cases provided print out of the daily cash transactions are taken out and kept on record, each entry duly attested by the DDOContd./-

12. 1212 Bank Reconciliation Statement - Para 82 of the Manual provides preparation of monthly bank reconciliation statements Para 82 of the Manual provides preparation of monthly bank reconciliation statements Ensure that the same is prepared at all levels wherever bank accounts are operative Ensure that the same is prepared at all levels wherever bank accounts are operative Take immediate action to cancel all stale cheques and credit the same to SSA accounts. Take immediate action to cancel all stale cheques and credit the same to SSA accounts.Contd./-

13. 1313 Asset Register – Mostly, not being maintained or if maintained not in the prescribed format Mostly, not being maintained or if maintained not in the prescribed format Ensure maintenance of asset register in the format given in Annex-V of the Manual at all levels Ensure maintenance of asset register in the format given in Annex-V of the Manual at all levels Also ensure physical verification of assets annually Also ensure physical verification of assets annually Detailed procedure for the maintenance of asset register is given in Para 62 of the Manual Detailed procedure for the maintenance of asset register is given in Para 62 of the ManualContd./-

14. 1414 Advances Treated as Expenditure - Para 72 of the Manual provides that funds released to districts on sub district level units are initially classified as advances and these are adjusted on receipt of utilization certificate / expenditure statement Para 72 of the Manual provides that funds released to districts on sub district level units are initially classified as advances and these are adjusted on receipt of utilization certificate / expenditure statementContd./-

15. 1515 Para 73.1 of the Manual envisages that advances released on account of school grant, teacher grant, TLE, maintenance grant, civil works by community, teachers salary, EGS / AIE (salary & materials), teacher’s training and contingency grant to BRC/ CRG are treated as expenditure for the purpose of reporting only. Para 73.1 of the Manual envisages that advances released on account of school grant, teacher grant, TLE, maintenance grant, civil works by community, teachers salary, EGS / AIE (salary & materials), teacher’s training and contingency grant to BRC/ CRG are treated as expenditure for the purpose of reporting only.Contd./-

16. 1616 In the books of accounts, these will remain as advances and treated as expenditure only on receipt of expenditure / utilization certificate In the books of accounts, these will remain as advances and treated as expenditure only on receipt of expenditure / utilization certificate Ensure that the utilization certificate / expenditure statement is obtained within the time limit prescribed against each item as laid down in Para 73.1 of the Manual Ensure that the utilization certificate / expenditure statement is obtained within the time limit prescribed against each item as laid down in Para 73.1 of the Manual In many states advances are treated as expenditure and included in the audit report which should be avoided in future In many states advances are treated as expenditure and included in the audit report which should be avoided in futureContd./-

17. 1717 Advance Register - Para 74 of the manual provides maintenance of an advance register Para 74 of the manual provides maintenance of an advance register The format for the advance register is given in Annex-VI of the Manual The format for the advance register is given in Annex-VI of the Manual Presently, in many states this is not being maintained Presently, in many states this is not being maintained Ensure that all advances are noted in the register and necessary adjustments are carried out immediately on receipt of the utilization certificate / expenditure statement Ensure that all advances are noted in the register and necessary adjustments are carried out immediately on receipt of the utilization certificate / expenditure statementContd./-

18. 1818 Outstanding Advances - At present no mechanism exists in states to monitor outstanding advances At present no mechanism exists in states to monitor outstanding advances More focus should be given to the maintenance of advance register and the adjustment of advances More focus should be given to the maintenance of advance register and the adjustment of advances Large advances paid to Government departments, NGOs and staff are outstanding for a considerable period of time Large advances paid to Government departments, NGOs and staff are outstanding for a considerable period of time Ensure that all outstanding advances are adjusted immediately Ensure that all outstanding advances are adjusted immediatelyContd./-

19. 1919 Delay in Submission of Utilization Certificates Para 73.3 of the Manual envisages that UCs are obtained within the time limit prescribed in Para 73.1 of the Manual Para 73.3 of the Manual envisages that UCs are obtained within the time limit prescribed in Para 73.1 of the Manual The time limit is not strictly adhered to in many cases resulting inordinate delay The time limit is not strictly adhered to in many cases resulting inordinate delay Evolve a proper mechanism to obtain the UCs from sub district level units in time Evolve a proper mechanism to obtain the UCs from sub district level units in timeContd./-

20. 2020 Internal Audit – Para 100 of the Manual envisages the detailed procedure for internal audit Para 100 of the Manual envisages the detailed procedure for internal audit The system is available in almost all states but the same needs strengthening The system is available in almost all states but the same needs strengthening Incase, in house arrangement is insufficient hire the services CAs by using the TOR given in Annex – XIII of the Manual Incase, in house arrangement is insufficient hire the services CAs by using the TOR given in Annex – XIII of the Manual Ensure that internal audit is carried out on a concurrent basis and suitable follow up action taken on its reports Ensure that internal audit is carried out on a concurrent basis and suitable follow up action taken on its reportsContd./-

21. 2121 Statutory Audit - Para 101.9 of the Manual envisages that CA firm’s annual audit report is made available by 30 th September by every year Para 101.9 of the Manual envisages that CA firm’s annual audit report is made available by 30 th September by every year Most of the states could not submit the audit reports for 2007-08 in time Most of the states could not submit the audit reports for 2007-08 in time Ensure that the audit report for 2008-09 is submitted in time Ensure that the audit report for 2008-09 is submitted in time Ensure prompt follow up action on the compliance of the audit report Ensure prompt follow up action on the compliance of the audit reportContd./-

22. 2222 Diversion of Funds / Other Financial Irregularities - Para 86.1 of the Manual provides that SSA funds are not diverted or re- appropriated to meet any expenditure which was not sanctioned Para 86.1 of the Manual provides that SSA funds are not diverted or re- appropriated to meet any expenditure which was not sanctioned Ensure that no diversion or other financial irregularities are taken place Ensure that no diversion or other financial irregularities are taken place Take immediate action to recoup the funds diverted or spent irregularly Take immediate action to recoup the funds diverted or spent irregularlyContd./-

23. 2323 Excess Expenditure - Para 85.2 of the Manual provides that total expenditure is kept within the limit of the budget provision Para 85.2 of the Manual provides that total expenditure is kept within the limit of the budget provision Excess expenditure reported under some interventions Excess expenditure reported under some interventions Re-appropriation of funds under the orders of state EC is envisaged in Para 86 of the Manual Re-appropriation of funds under the orders of state EC is envisaged in Para 86 of the Manual Any re-appropriation beyond this limit should be approved by PAB at the national level Any re-appropriation beyond this limit should be approved by PAB at the national levelContd./-

24. 2424 Fixed Deposit - Fixed Deposit under SSA is not permitted Fixed Deposit under SSA is not permitted Ensure that no fixed deposit is made Ensure that no fixed deposit is made Any fixed deposit made should be withdrawn immediately and credited to SB account Any fixed deposit made should be withdrawn immediately and credited to SB accountContd./-

25. 2525 Interest - Para 89.4 of the Manual provides detailed procedure for accounting of interest Para 89.4 of the Manual provides detailed procedure for accounting of interest The interest accrued on the savings bank accounts of school, CRC, BRC level is not being accounted for in the SSA accounts and not reflected in the annual accounts The interest accrued on the savings bank accounts of school, CRC, BRC level is not being accounted for in the SSA accounts and not reflected in the annual accounts Ensure that interest credited at these levels are also included in the annual accounts Ensure that interest credited at these levels are also included in the annual accountsContd./-

26. 2626 Delay in Transfer of Funds - Para 89.3 of the Manual provides transfer of funds to districts and from districts to sub district level units within 15 days of its receipt Para 89.3 of the Manual provides transfer of funds to districts and from districts to sub district level units within 15 days of its receipt Ensure that funds are transferred within this time limit Ensure that funds are transferred within this time limitContd./-

27. 2727 E-Transfer of Funds- Para 89.5 of the Manual provides electronic transfer of funds at all levels wherever such facilities exist Para 89.5 of the Manual provides electronic transfer of funds at all levels wherever such facilities exist Many states have adopted this system Many states have adopted this system Other states should also adopt this system by 30 th September 2009 wherever such facilities exist Other states should also adopt this system by 30 th September 2009 wherever such facilities existContd./-

28. 2828 Defects noticed Not followed Levels of procurement in terms of Para 107 of the Manual Not followed Levels of procurement in terms of Para 107 of the Manual Made procurement of goods and services not included in the procurement plan Made procurement of goods and services not included in the procurement plan Not followed the method of procurement envisaged in Para 109 of the Manual Not followed the method of procurement envisaged in Para 109 of the Manual Non-availability of procurement documents Non-availability of procurement documents Procured goods in excess of the requirement and lying in stock Procured goods in excess of the requirement and lying in stockProcurement

29. 2929 Engaged NGOs without following the selection procedure Engaged NGOs without following the selection procedure Computers purchased under CAL are lying idle for want of space, power connection, trained teachers, software etc Computers purchased under CAL are lying idle for want of space, power connection, trained teachers, software etc Procured computers without inviting tenders or under the rate contracts of DGS&D/State Procured computers without inviting tenders or under the rate contracts of DGS&D/State Procured printers for schools without ascertaining its utility Procured printers for schools without ascertaining its utilityContd./-

30. 3030 Not entered into MOU with purchasing agency prescribing terms and conditions like cost, delivery date, inspection, liability of the seller during warranty period, liquidated damages for delay in delivery, rate of commission, payment terms etc. Not entered into MOU with purchasing agency prescribing terms and conditions like cost, delivery date, inspection, liability of the seller during warranty period, liquidated damages for delay in delivery, rate of commission, payment terms etc. Cost of goods purchased through purchasing agency was in excess of the market rate Cost of goods purchased through purchasing agency was in excess of the market rateContd./-

31. 3131 Part payment made for part supply without provision in the agreement to avoid lapse of budget provision Part payment made for part supply without provision in the agreement to avoid lapse of budget provision Injudicious purchases in the month of March to avoid lapse of budget provision Injudicious purchases in the month of March to avoid lapse of budget provision Penal provisions in contracts not enforced Penal provisions in contracts not enforced While submission of sample was mandatory along with the bids, contract awarded to firm who failed to submit samples While submission of sample was mandatory along with the bids, contract awarded to firm who failed to submit samples Goods accepted and payments made without inspection and certification Goods accepted and payments made without inspection and certificationContd./-

32. 3232 Text books procured in excess of the requirement Text books procured in excess of the requirement Delay in distribution of text books Delay in distribution of text books Feasibility of printing of text books through state government press not ascertained before inviting tenders from private printers Feasibility of printing of text books through state government press not ascertained before inviting tenders from private printers TDS not recovered at the time of payment TDS not recovered at the time of payment Delay in construction of civil works Delay in construction of civil worksContd./-